What is social entrepreneurship?

Social entrepreneurship is a term that has attracted much interest in recent years, and more and more people and companies see themselves as social entrepreneurs. Networks that bring them together have emerged, and we are seeing an increasing number of investors wanting to invest in such companies. But what actually is social entrepreneurship?

A social entrepreneur is one or more individuals who want to contribute to the creation of a solution to a social problem.

A social entrepreneur may invent a new technological solution or develop a service that helps solve a social problem – often more effectively than before.

Close to their target group

Sometimes innovative people of this type are public sector employees, in which instance they are termed social intrapreneurs. Social intrapreneurs often work with vulnerable target groups, solve unsolved problems, and create new solutions within their organisation or company. Sometimes they find that their workplace does not want to change and that they need to take the solution outside of their organisation. The majority of such people find that they need to create their own source of revenue in order to make a living from the solution, and so they set up a company that sells their technology or service to those that need it.

In other instances, new solutions of this sort are created by people who have personal experience of an unsolved social problem. They then choose to start their own company in order to identify better solutions for their target group. They will often develop their own solutions in dialogue with the target group.

Double bottom line

If a company is primarily committed to solving a social problem, it is called a social entrepreneur. Companies of this type must then strike the difficult balance between achieving their social ambition and operating commercially so they can be viable and grow. Companies of this type are said to operate with a double bottom line, meaning they generate both social and financial results.

Who pays?

The challenge for social entrepreneurs is often that the people they are trying to help are not able to pay for the services or technology that they need. This means social entrepreneurs have to find other people interested in solving the same social problem who can pay for the services or technology to be provided. Norway has such a well-developed welfare state that the majority of people experiencing a social problem are in contact with one or more “help systems”. The challenge is therefore convincing these systems that there is a better solution that they should invest in, adopt or make available to their ‘users’.

One example of this is provided by Firdawsa Ahmed and Saad Yusuf Hashi, who tried to convince the municipality in which they worked that when providing assistance measures it should use employees who had the same cultural and linguistic background as the service users. The municipality either did not want to or could not achieve this, so Firdawsa and Saad set up Atlas Kompetanse. Atlas Kompetanse now sells exactly this means of providing assistance measures to the child welfare service because they have shown that it is more effective. The approach improves communication and removes the need to pay for additional interpreters. It is a win-win solution that both has a social impact and is financially sustainable.

 

Atlas Kompetanse prevents exclusion among children and young people from minority backgrounds by strengthening the dialogue between recently arrived parents and the Norwegian welfare system. Photo: Tristan Rasay.

Other social entrepreneurs find more direct ways of financing their solution. Chris Klemmetvold wanted to get people with a history of substance abuse into work so they could create a new platform for themselves. He therefore set up Medarbeiderne and employed people with a history of substance abuse in order to sell a subscription service involving the collection of recyclable packaging materials from people’s homes in Oslo. The employees who drive round and collect the recyclable materials also have a history of substance abuse. This is also the case for those who work in the company’s Flytt & sjau (removals) department, and in its Renvasking (cleaning) service. The company has shown that its employees are trustworthy and can succeed if they are given the opportunity.

Medarbeiderne provides people with a history of drug abuse permanent employment. Photo: Fartein Rudjord.

Something to live off

For many social entrepreneurs, it can be difficult to find an organisation willing and able to pay for what they provide, meaning they need financial support for a certain period of time. This can be from their own savings, family, friends or more professional sources such as foundations, funds, public support schemes or investors. If it proves impossible to interest public sector organisations in finding about the service they offer, many social entrepreneurs will need to continue applying for grants.

Social entrepreneurs who create a solution that experience reveals to be better than the solution currently available frequently prove to be remarkably tenacious. Those social entrepreneurs that find a paying customer and successfully manage to deliver the service to increasing numbers become of interest to organisations that invest money in sustainable businesses. This can be a great help to the social entrepreneurs concerned as well as a source of financial security, in addition to providing them with a way of reaching even more people with their solution.

A lab for the welfare state

The value to the welfare system of co-operating with social entrepreneurs is obvious. Social entrepreneurs are the type of people who see the potential for society to be better. Their solutions become a laboratory for a proactive welfare state that makes it possible for relatively small sums of money to be invested with the aim of finding out which solutions work the best. The public sector can then work with the companies whose solutions prove successful, either buying their services or simply incorporating the most efficient solutions into its own services.

Three functions in relation to the public sector

Agenda, a think tank, divides social entrepreneurs in Norway into three categories: Hunting dogs, Challengers and Placers. Hunting dogs are social entrepreneurs that find gaps in the welfare state’s services and come up with entirely new solutions. Challengers are social entrepreneurs that think existing measures are not having a big enough impact and look to compete with what is currently provided. Placers are social entrepreneurs that get people into or back into employment through their own company or organisation.

Photo: Atlas kompetanse